Comment Submitted by James Cegla, Minnesota Housing Finance Agency

The Minnesota Housing Finance Agency does not administer the Housing Choice Voucher program, but does administer a number of programs for developing or rehabilitating affordable rental housing for low-income households. Project-based vouchers are an essential element in ensuring affordability for the lowest income households served by that housing, and providing permanent supportive housing to end homelessness. Minnesota Housing’s only comment is with respect to §983.152. This proposed rule establishes a bright line definition of commencement of new construction as the start of excavation or site preparation for the housing. “Commencement of construction” is important as it defines the latest date by which an owner and PHA may enter into an agreement to enter into HAP Contract (AHAP). HUD has asked for comment on the applicability of this requirement to projects receiving other federal funds on which construction has already started. Minnesota Housing’s experience is that it is not uncommon for site preparation to have begun before a developer submits a proposal for funding. The proposed "commencement of construction" standard eliminates a funding agency’s opportunity to influence a developer to incorporate PBV units into the development after its selection. Beyond foreclosing opportunities to incorporate PBV units into a development, it is not apparent that this definition of commencement of construction serves a useful purpose. The primary concern of the PHA and HUD should be that the property meets the program’s requirements cited in the AHAP. With the exception of commencing construction before execution of the AHAP, all the other requirements of the AHAP that are more substantive to the project can be met. Given our experience, we recommend that HUD provide the greatest flexibility allowed by law for owners and PHA’s to enter into AHAPs, even after the proposed definition of “commencement of construction,” for projects that meet the other